Buy and hold... rental property question

[Al Philips]

I have two properties that I am look to buy and hold.

Both properties are in same city, first one is in a good location and second one is in not such a good location but can be easily rented on section 8

First one is listed for 199k as is build in 1993  and needs about 10k to 15k worth of work.. Zestimated for this property is about 225k.  We made an offer for 185k and 5k closing, seller came back with a offer of 190k and 5k in closing. Rent is going to about 1500 and payment my monthly payment is going to be 1200....Should I go with this or not?

Second one is listed for 149k build in 1970 and needs about 6k to 8k worth of work.. Zestimated for this property is about 170k. We are going to make an offer for 145k and 5k closing.

Rent is going to about $ 1200 and payment my monthly payment is going to be $930....Should I go with this or not?

[Anna Watkins]

@al 

@Al Philips   -- as everyone has said above, both deals as described aren't any good for you.   A couple of replies have alluded to all the expenses to take into account before you figure your "cash flow"  -- as a beginner I think you've left these out of your numbers.  The mortgage payment (principal, interest, taxes, insurance) is only part of it.  You also need to figure in (as in pay or set aside) certain percentages for occasional repairs, big expenses down the road, property management (just in case you get tired of landlording someday), and vacancy (what happens when a tenant leaves and you don't get another one right away?  Mortgage is still due!).  

So a property renting at $1500 with a mortgage payment of $1200 (including tax & insurance escrow) doesn't actually have a "cash flow" of $300.  After you take out $150 for your maintenance set-aside and $150 for vacancy (10% each), you're already at $0 cashflow, even before you count in anything else.

Also, the offer prices vs. the list prices you mention are way too high!  Figure out how much you can pay that will fit this formula -- $Rent - $desired cashflow => mortgage + all expenses.  And then offer less.  If you get a counter offer, you have room to go up, but don't go over the maximum, or you'll be paying out of your pocket instead of with OPM (other people's money; the bank's and the tenant's!!)

Good luck!